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Australian shares have risen, largely led by mining and gold sectors, with sentiment lifted by the US Federal Reserve's November meeting minutes indicating slower rate hikes are ahead.
Key points:
- The ASX 200 has lost less than 3 per cent since the year began
- Overnight, all three major Wall Street indices closed up
- The pan-European STOXX 600 index has hit a three-month high
The minutes showed a "substantial majority" of officials favoured less aggressive rate hikes in the coming months to allow the economy to absorb the outsized increases in borrowing costs.
"The Fed and financial markets are close to alignment on their expectations for [the] peak policy rate of around 5 per cent in this cycle," GSFM investment strategist Stephen Miller said in a note.
"There is some divergence around how quickly the policy rate might decline from there."
The ASX 200 closed up 10 points, or 0.1 per cent, to 7,242.
By 4:12pm AEDT, the Australian dollar was up, buying at 67.58 US cents.
Mining stocks led the gains, rising 1 per cent, with sector majors Rio Tinto, BHP Group and Fortescue Metals adding 0.5 per cent to 1.4 per cent.
The advance came despite iron ore prices falling in top steel producer China.
The gold sector was boosted by a weaker greenback across the board, jumping 2.9 per cent.
St Barbara was the top performer, up 9.1 per cent and Newcrest Mining and Northern Star Resources notched up 2.6 per cent each.
However, energy stocks fell about 1.8 per cent, following lower Brent crude prices after the Group of Seven (G7) nations suggested a price cap on Russian oil above current market level.
Brent crude oil was down, trading at $US85.18 a barrel, by 4:15pm AEDT.
New Hope plunged 8.8 per cent, Woodside Energy fell 1.4 per cent and Santos lost 1.6 per cent.
The financial index slipped 0.3 per cent, although shares in local healthcare firms traded 1.3 per cent higher.
AGL Energy fell 1 per cent. The company plans to shut down its gas-fired Torrens Island "B" power station in South Australia in June 2026, having closed the final unit at the "A" power station just a few months ago.
RBNZ Governor flags 2023 recession
The Reserve Bank of New Zealand (RBNZ) said interest rates would have to go higher, threatening to tip the local economy into recession.
"We are sorry that New Zealanders are being buffeted by significant shocks and inflation is above target," RBNZ governor Adrian Orr told a committee at parliament.
"As we've said before, inflation is no-one's friend and causes economic costs.
New Zealand's central bank raised its official cash rate by a record 75 basis points to a near 14-year peak of 4.25 per cent on Wednesday in an effort to contain inflation near a three-decade high.
"Interestingly, the RBNZ appeared to contemplate whether an even greater increase in the official cash rate was warranted by noting that, 'The committee gave consideration to an increase in the official cash rate of 75 or 100 basis points,'" Mr Miller said.
"It ultimately decided not to go down that path, adding that, 'On the balance of risks, the committee agreed that a 75-basis-point increase was appropriate at this meeting.'”
US stocks rise on hopes of a slower rate rise
Wall Street's main indexes edged higher on Wednesday after minutes from the Federal Reserve's November meeting showed interest rate hikes may slow soon.
Since the Fed's last meeting in November, investors have been more optimistic that price pressure has started to ease, signalling smaller rate hikes could curtail inflation.
"What equity markets needed to see for the recent strength to continue was what we got from the minutes," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
The Dow Jones Industrial Average rose 0.37 per cent, to 34,225.33, the S&P 500 gained 0.64 per cent, to 4,029.26 and the Nasdaq Composite added 1.08 per cent, to 11,294.92.
Trading volume was thin ahead of the Thanksgiving holiday on Thursday, with the US stock market only due to be open for a half-session on Friday.
The S&P 500 posted 21 new 52-week highs and no new lows, while the Nasdaq Composite recorded 81 new highs and 112 new lows.
US jobless claims hit three-month high
On Wednesday, US Labor Department data showed jobless claims increased more than expected last week.
US business activity contracted for a fifth month in November, according to the S&P Global flash US Composite PMI Output Index.
Initial claims for state unemployment benefits dropped 4,000, to a seasonally adjusted 222,000, for the week ended November 12.
Economists polled by Reuters had forecast 225,000 claims for the latest week.
"I didn't really think there was any surprises," said Jordan Kahn, chief investment officer at ACM Funds in Los Angeles, California.
"They seem to still be pointing out that the risk to inflation are still high and recent data has been more persistent than they thought."
"People are going to get excited when they [see] that some participants who were mentioning the need to slow the pace of rate hikes. But the market was already pricing in a 50-basis-point rate hike for December and the odds in the Fed futures market of a 50-basis-point hike was already 70 per cent going into this minutes," he said.
Credit Suisse drops after flagging hefty loss
Meanwhile, Europe's STOXX 600 index rose 0.6 per cent to its strongest level since mid August on Wednesday.
Mining stocks extended gains for a second session, rising 1.8 per cent, while travel and leisure and retailers gained 1.9 per cent and 1.7 per cent, respectively.
Credit Suisse slid 6.1 per cent after the embattled Swiss lender estimated a pre-tax loss of up to 1.5 billion Swiss francs ($US1.58 billion) for the fourth quarter as wealthy clients made hefty withdrawals.
ABC/Reuters